The Capital Hotel is undergoing changes to reposition itself as an upmarket boutique hotel. It faces increased competition from international hotels that have opened in the city. A new strategy aims to improve service quality while maintaining competitive prices. An HR assessment is needed to identify staffing issues and priorities to enable the strategy. This includes gathering additional internal and external data, and developing an action plan to address recruitment challenges, optimize staff deployment, and improve skills through training.

1. Case Study: Strategy and HR Planning at the Capital Hotel
The Capital Hotel is located in the capital city of a Central European country. In the past its main
clientele has been government officials and administrators in departments of state and managers of
heavy industries visiting the capital on official government business. The roomoccupancy rate was on
average 50%. This custom has declined somewhat in the last two years, but it has been more than
replaced by business-people from neighbouring countries in the week and by foreign tourists at the
weekend. The average room occupancy rate is now 75%; 60% of rooms are sold at 'rack' price and it is
not uncommon for the hotel to be fully booked especially at weekends. Generally speaking there is
greater demand for catering staff at weekends since many tourists like to take lunch in the hotel’s
restaurant. However, there is lower demand for housekeeping staff at weekends as tourist customers
generally stay for longer periods than business-people and make less demands on this service.
Currently the hotel has 240 twin rooms but an extension is now being built and next year there will be
345 twin rooms altogether plus a revamped leisure club with a brand-new swimming pool and spa (run
independently as a franchise). The owning company, European Leisure Resorts, wishes to reposition
the hotel, re-designing and re-branding the hotel as an up-market “boutique” hotel. A new name is
proposed, “The Garden Court”. A new General Manager has been “head-hunted” fromone of Russia’s
top hotels and her mission is to transform the quality of the hotel while ensuring good value for money.
Competitive Pressures and Strategic Responses
During the last two years a number of international hotel groups have opened hotels in the city to cater
for the new markets. All of these are known for their high standards of service. Prices are
correspondingly high. The management of Capital Hotel believe that to compete they need to improve
the standard of service whilst pegging prices some 10% below their competitors. A survey of
customers has indicated that customers would like the checking-in process to be made quicker, for
service in the restaurants to be speedier and more friendly and for the rooms and public areas to be
decorated and furnished to a higher standard.
Hotel Staffing
There are three departments in the hotel – front-of-house/administration, housekeeping/maintenance,
and catering. Reception work on a three shift system ‘around the clock’. Housekeeping works on a
single shift system (from 06:30-16:00) with some overtime working to cover evening cleaning duties.
Catering operates a two shift system from 06:00-15:00 and 15:00-24:00. Housekeeping staff are
usually idle for about 2 hours of their shift. By contrast catering staff are very busy for their entire
shift. Staff in the maintenance division of housekeeping have very variable workloads, often working
under low pressure during their normal 07:00-15:30 shift but then having to work under intense
pressure, and being paid “double-time”, if there is a maintenance fault that needs urgent repair during
the evenings or at weekends. Two of these staff are paid a small, out of hours, on-call standby fee.
The management staff are usually recruited from outside the hotel, whilst departmental supervisors are
usually promoted from within the department. Training and development is mostly on an ad hoc, as
needed “on-the-job” basis although 0.4% of total salary costs are spend on formal training which
consists mostly of sending staff on statutory health, safety and hygiene training courses.
Labour Turnover in the Hotel
Until two years ago the average annual turnover rate (i.e. the proportion of staff leaving during the
year) was 10%. Half of this figure was composed of employees retiring (retirement age is 65). Over
the last two years the annual turnover rate has gone up to 25%. One-fifth of those leaving were
retirements. Three fifths of those leaving were in the catering department. Two-fifths of those leaving
had less than sixmonths employment.

2. Staff Profile
Management have recently collated information on the number of employees by occupation and age as
a first step in preparing a human resource plan. All staff are employees, mostly full-time; very little use
is made of agency staff and only non-routine work is contracted out.
Occupational
group
Staff
numbers
Ages
Management 9 64, 63, 62, 55, 53, 50, 48, 48, 28
Reception/Clerical
Supervisors 6 45, 38, 37, 35, 32, 32
Staff 18 64, 64, 64, 63, 61, 60, 58, 46, 45, 39, 25, 25,
20, 20, 19, 19, 18, 17
Housekeeping
Supervisors 4 63, 56, 45, 36
Staff 25 64, 64, 63, 63, 62, 58, 57, 54, 54, 50, 46, 40,
37, 32, 22, 18 (x10)
Maintenance 4 69, 60, 52, 18
Catering
Supervisors 8 64, 64, 60, 59, 58, 55, 55, 52
Chefs 4 64, 46, 40, 32
Kitchen Staff 15 63, 59, 58, 52, 40, 39, 37, 37, 25, 25, 22, 21,
19, 18, 18
Bar /Waiters 12 49, 49, 46, 45, 42, 40, 40, 36, 35, 35, 31, 29
TOTAL 101
The Local Labour Market
Since the international hotels opened there has been a problem in recruiting kitchen and bar staff
because the newcomers are able to pay 15% higher wages. It is also difficult to recruit chefs as there is
a severe regional shortage of the sort of top class chefs needed to achieve the restaurant awards that the
management require to realise the overall strategy of a quality “boutique”, hotel.
Group Tasks
Assuming that you are working as HR Consultants to Capital Hotel with a brief to enable the hotel to
achieve its higher quality / lower cost strategy within 12 months; prepare a short presentation which
addresses the following:
1) Identify the further forms of internal and external HR data that you will need to gather or
generate to undertake this consultancy project.
2) Identify the HR issues that currently face the hotel:
a) internally
b) externally
in terms of staff numbers, deployment and skills.
3) Prioritise the HR actions that are necessary to enable the hotel to realise its strategy:
Action plan what should be done, when and why and take into account the cost of realising
these actions given that Capital Hotel is hoping to be a cost leader.
4) Assume that you have now become HR Managerat the hotel and have to deal with attendance
/ capability problems with staff who have poor attendance records with the aim of improving
their attendance. Prepare a presentation detailing an attendance policy and then role play two
attendance / capability interviews.
Employee A: this employee is a 26 year old team leader of a housekeeping team. She has a
degree in hotel management. She has regular short-term absences from work because of a
complex personal life involving a sick dog and various personal relationships problems. Her
manager feels that she is also applying for jobs elsewhere.
Employee B: this employee is a 44 year old, father of five children and a member of the
overnight maintenance team and has worked for the hotel since completing his plumbing
apprenticeship. He has an exemplary employment record, putting in extra hours without pay
to ensure the hotel is well maintained. Within the last six months this employee has had two
periods of absence of 3 weeks and 5 weeks both “certified” by a doctor as being attributable to
a genuine illness.